♪ >> a live from pier three in san francisco, welcome to bloombert west. i'm emily chang. alibaba may have filed for an ipo, but it is not making questionsinvestors disappear. a deeper look into the e-commerce giant's filing, including why it did not break down revenues for two key businesses. plus, twitter shares have lost more than 20 set -- 20% of their value last week.

is it just insiders cashing out for dough or does it say something broader about the future of the company? first, a check of bloomberg top tech headlines. a huge push into open source cloud computing. the company is investing $1 billion over the next two years is open cloud platform. hp is also branding its other clout products and services under the healy on name. microsoft is set to unveil a smaller version of the surface tablet in new york on may 20 according to people with knowledge of the plans who say they will use a qualcomm chip for the very first time. microsoft will also unveil other service models in the event that are powered by an intel chip. to is extending its contract broadcasting via webex in the united states. comcast network will pay the international olympic committee more than $7.6 billion for the rights to every olympic game through 2032, including pay tv,

mobile, and web viewing. it extended its deal after turning a profit on associate games in february. to our lead story of the day, alibaba's ipo filing show the chinese commerce business is the big cash king in the whole company. china commerce brought in sales of $5.7 billion for the last nine months of last year, accounting for 87% of alibaba's total revenue. the bulk of that revenue is made by teeth -- two sites. consumer to consumer site where people buy everyday goods, kind of like ebay. you could bar -- bargain. the other is a business consumer site for higher brands like nike and apple. what alibaba did not do is break down how much comes from each site. it has potential investors wondering if each growth rate is slowing. joining us now is cory johnson in the studio. with us from new york is the ceo of an online community that focuses on providing luxury

goods to chinese shoppers. brian, i will start with you. you have a lot of experience with both sites. describe how they compare and how they are different. qwest a good question. about a consumer to consumer selling marketplace, almost where the great matches sell products to one another. the other is more of a traditional business to consumer marketplace where actual their products to consumers rather than consumers selling products to consumers. qwest why would they not break out the numbers? a great question. this may be something they have to amend. they are really big numbers. another site they mentioned, you might know that one but i do not. so that is another one they mentioned. the 87% ofpart of

revenue coming from these sites. it is an interesting business. alibaba.com, that is the business they are suggesting will have a lot of growth. it is more of a b-2 b business. there is a lot more growth potential but not breaking it out. qwest any indication one site is doing better than the other? even if we do not have the actual numbers, just anecdotally? >> part of the challenge for enough for alibaba is the fact withit is doing all right lesser priced items, with less luxury goods. it is not doing as well when it is working with higher and retailers. that is a big part of the growth story that does not match up with the reality of the business. those two businesses are somewhat competitive with one another, where a consumer may be able to get a higher-priced item rather than directly through the retailer, and that is problematic.

>> what exactly do we know? >> among the things we know is really growing for these guys rapidly. they seem to have success. one of the numbers they put out is gross to merchandise volume. they do not report a top line number every quarter in merchandise, they might do that over time. i would not be surprised to see that. they have gone from seven percent of sales a year ago, the fourth quarter a year ago, seven percent mobile. that was 20% in the recent quarter. rapid adoption of mobile and we expect the trend to can -- if the trend continues, that will grow fast. meansot know what that with luxury and not luxury, but we see rapid growth. not coming in mobile with no experience and no success, as facebook was.

qwest described to us how chinese consumers view these sites. i know fraud has been an issue and it is an issue in broader chinese markets in general. how does that play into this? >> the model is a little bit where, to a certain extent, buyer beware. there are things, including ali pay, their paypal like mechanism, some money will go in until you accept the product, but there is a buyer beware mentality, whereas it is much more about getting the legitimate product directly from the retailer. the consumer thinks about one as, how to get cheaper and options, and the other is about how to get it from direct retailer. large sites like amazon have a lot more legitimacy, potentially among higher-priced items. >> describe the relationship with ali pay, the part of the company that was fun off that

a preferentialns commercial agreement with. this is the mechanism by which everything is paid for. qwest if you think about alibaba more generally, they benefit from two name trans. one is the network effect of having many buyers leading to many sellers and more buyers than sellers. the other is the layer they have created to make buying even knee-jerk -- even easier. --nese consumers can even use their alley pay, just like paypal but even easier, to buy directly off the mobile device, which cory mentioned, but also off of desktop. it allows them to take advantage of the 20% of commerce market they do not currently control in china. many of those purchases happen through alley pay as well. lastly, it allows them to increase their margin. now, when products are bought and sold through alibaba, they do not just make their money throughout the product sale or the advertising. they also make money off of providing the payment mechanism

on top of that. >> there was a big to do we talked a little bit about yesterday. he says he had no choice and had to do it because of chinese regulations. when you look at the f1, we find out softbank and yahoo! agreed to vote their shares in favor of alibaba board members. does that signify they completely trust jack and there are not lingering issues between them? verify. and we will use the ronald reagan cold war notion there. what we see is these guys have an interest in getting the deal out and getting liquid in the stocks. they want this to proceed without hiccups. they had a meeting of the minds to get the deal out. we will see if they eventually want to sell or if there are secondaries involved area there are possibilities here. >> all right. our editor at large, cory johnson. thank you so much.

still ahead, how did an internet search for chinese year launched china's biggest e-commerce company? we will get the story from the e-commerce founder from someone who works with him very closely from the beginning. plus, alibaba watchers will listen to see if the ceo marissa mayer has anything to say about the ipo filing with yahoo! holding a 22% stake in the company. my will speak in new york city at the top of the hour. stay with us for live coverage of her remarks. ♪

>> i am emily chang and this is bloombert west on bloomberg television and streaming on your phone, tablet, bloomberg.com, apple tv, and amazon fire tv. twitter shares have gone into freefall the last two days, down more than 20%. this is cosigning with the expiration on tuesday, allowing

early investors and employees to sell shares for the very first time since twitter went public since november. is exploration behind the drop? me here inll with the studio as well as the managing director at wells fargo. thank you for joining us. how surprising is the drop to you? >> there is a big question right now. our cloud stocks and all the new tech stocks in a bubble. when you look at the amount of supply that has come to market over the last six months, it is huge compared to prior years. are really talking about supply is just massive now. >> david was talking about these echoes stocks. the fourth provider, the company that used to make software but now the software is a service. guys where you see a crazy valuation because of the redefinition of the company.

question, we are seeing the structure much different than prior cycles. companies are showing less stock on the initial public offering. they go public later. here you are 12 and 15 months later, where you have a secondary and then an enormous amount of stock coming. >> is the way twitter is structured different from facebook and linkedin? completely different market reactions post lockup. class i do not think you could look at one company and say, ok, it was a representative of every model. most companies have been in this form. where they're offering 10, 15% of the total amount of shares and the rest magically get registered 180 days later. >> yes. you have seen that companies. thate case of facebook,

stock was -- >> limited first. >> dramatically improving financial results a year after its ipo. see.ll >> they went to the transition of mobile literally as they were going public. >> what about twitter specifically? there have been a lot of questions about the future of the company. i understand employees want liquidity and everybody has to pay their rent or a down payment or whatever by tesla. ok. symbolize a lack of police in the future of the company on the part of the employees themselves? >> no, i do not know about based on the employees. they've been looking at starting commies for the past five years. not being able to monetize the equity. it is pretty natural to see employees sell stock after they go public. i do nothing that is representative of their belief

in the company. i think the bigger picture here at the size,ook the amount of supply, it is like a snowball that keeps building and building and going downhill and turning into an avalanche. bigger that is the question or the bigger issue versus the individual programmer who decides he will sell a little stock. >> i am not to market focus. i am more business focused. today, when there are a couple of really big selloffs going on with twitter yesterday more than today, aol down 26% right now, groupon was down 10%, i looked today. is there something going on? get asked the question all the time, are you in a bubble? is this 2000 all over again. i do not think we are. i think if you look at it and go back to the structural issue and the amount of supply that is really coming to market in the last 90 days or so, we have some

valuations that are stretched. i would argue the fundamental the cycle, much stronger than 15 years ago. >> some companies, and definitely not. >> when you get to the later stages of the ipo cycle, it is not always tear one companies going public. you have smaller companies. growth may not be as great. the big thing is you have to manage expectations on the street. you have got to be able to deliver against what you committed. as you get into later cycles and you do not have as good a companies, and it is hard for the companies to meet the level. >> all right area we will watch to see if you are right. thank you for joining us. facebook is launching a new program to lure small business owners and is teaming up to do it. details are next. ♪

>> welcome back. facebook is looking to make better friends with small business owners. the social network launching "this fit," a program designed to teach businesses how to better use the site for advertising. i am joined in the studio. you guys are launching, -- youly, a full-court are going personally out there to hold these boot camp style seminars. >> thank you for having me. great to be back. we are hosting a series of five small business events around the country. it will be great to meet small business owners in their towns and communities. you can think of this like a boot camp, a chance to get your

, whetheris in shape you're just getting started or looking to add more expertise. we will work to help them understand how to grow their business, especially on mobile, and grow and benefit their communities. >> what are the things you are telling them? grow.are helping them to what can they do to grow their business. one of the big things they ask is, how can i work on mobile? we think facebook is one of the best solutions for businesses on mobile devices. whether you are trying to reach a billion people were small who is out on the go. we know small business owners for simple for simple and effective solutions. with that is what we will be focused on. >>, scan a face with rage help a small business. it is a more limited audience. >> billions of people on facebook. small business centers tell us facebook could be a really

effective place to grow their business. we had our first small business council and we heard stories from all types of industries about how facebook help them grow their business, whether getting them off the ground or to take it to a home new rep -- whole new level. >> this give you the inspiration to do these boot camps around the country. >> it did. one of the things they told us that was remarkable and we do not understand was how many of them were teaching folks in their own local communities. i will give one example. there was a guy i know for about two years and he runs an entertainment center in ohio. seen 75 entertainment. he is launching his business using facebook as his exclusive marketing channel. people in ohio started to come to them and say, you have been successful. onchers what you did

facebook. he started teaching classes at his facility. that became the inspiration for us and many other small it -- small business owners to see if you could get out in the community and teach people, how much you can help them. >> are you expecting the businesses to buy ads? >> we learn a lot from small business owners. we sit in silken valley and look at a lot of data every day. meeting people face-to-face and hearing how you can change their lives is meaningful. this facebook event is really inspired by small business owners. grow and thatem will return to facebook as well and help us grow. we only a paid and make money when they're willing to invest were not. grow.l see our growth >> you're doing this partnership with square. i know jack has done a similar and at square. he went to detroit and st. louis. jack and mark are friendly. how did the partnership come about? >> the companies were inspired

by small businesses. about payments and financial management and legal information. those are the partners we sought out for this event and they're the ones that will help small businesses grow as much as they can. >> what are the business -- biggest mistakes? >> small business centers, when they try to think of it as a social marketing solution as opposed to a marketing solution. fit is about helping you grow your business and achieve business objectives. that means getting people to come into the door and bring the cap treasure. people focus on trying to make the posts go viral. they focus on the wrong thing sometimes. apicture of a pretty puppy or dog on their page when they're trying to communicate who they are as a business. we think facebook is a real marketing solution that will help you achieve your objectives, not just a social marketing solution. you guys are getting out

there next month. thank you for joining us. jack is china's third richest man with a network of almost $13 billion. he is also known for the flare asbrings to his role alibaba's executive chairman. man behindthe china's biggest e-commerce company is next. ♪\ >> it is 26 mins past the hour. you can see the markets are very mixed. the nasdaq is in the red, down manby about one percent. this as a selloff in internet stocks continues. the broader markets, they are trading higher, slightly off session highs. the s&p of about four points. fromcomes after we heard

janet yellen at the central bank saying a high degree of accommodation remains wanted quote.hat is a both enslavement -- inflation and unemployment remained from the fed posses ideal goals. that helped lift equity markets higher. names like yahoo! and hold food -- whole food. ♪

quicktime emily chang. alibaba founder has made .illions he enjoys performing for employees also. take a listen. ♪ amazing. i believe that was for an anniversary celebration. how has his zany personality helped push ali baba to the top? in the studio, he is -- alibaba

launched in 1990 he consulted for the company. cory is here as well. you met him back in 1999 when he was just starting this thing. what was he like? questions like that. he was singing. no, he wasn't. he leaped out at you. not a tall man, but a wacky and larger than life image. you get a palpable sense he is something different in chinese and english. inkling hen, any could take the company this far? to be one of the biggest technology companies in the world? withsmall apartment toothbrushes with a number of employees. you can see they were spending a lot of time there, living around the apartment and working around the clock buried there was already a vision. inwas before softbank came and goldman came in. even then, it was like, why are these people so interested in the company?

talk is a vision he would and make it very comfortable but also feel he is something special. >> what is the fascination with the u.s.? is not true for a lot of the tech entrepreneurs in china. .e travels here early on he has early experiences opened to him. here and was determined to do something about that here at >> i want to talk about the ali pay incident when he spun off this art of the company without talking to yahoo!. he compared it where he needed to make a decision but he understood it was cruel. what do you make of why he did

that. almost like buying a car where china is a rocky road. you need good shock absorbers. there will be often in contradiction -- contradicting things happening with systems emerging. his ability, the company posses promises that they will try to insulate you as much as possible from that. what is inow exactly his mind, but they had to do something to take ownership into private hands, away from foreign ownership, to protect the company. people have questioned whether that is the case and it seems like the company will buy back its interest in ali pay in the future. there is -- there seems to be something odd about that. the ecosystem is so important to them. >> i wonder what he feels his responsibility to investors are. he has taken the company public

once. failing results. shares were bought back at a significant premium. a much bigger number. >> yes. the second offering of the company, with a second first company, is very different. company that is a there was more hype driven in the market by retail investors. in a sense, they did well. on day one, they tripled on the first day. then they began a very long rapid slide. we also have jack's trying to take a back seat, which is hard for him. titans -- i know -- i cannot imagine robin leigh singing.

>> he does not have much of a pitch, but a great guy. he would describe himself as a geek. he is not a techie. he did not study overseas. outreach international . he did not actually study overseas. he did not have pedigree in terms of tech. >> i believe he failed the exam. i recently interviewed robin leigh and asked him what a successful ipo would mean for china. take a look at what he had to say. >> it is always good to see chinese companies become more successful. ipo means more successful, i would be happy to see that.

but the chinese market is already very large. good companies are coming out every day. more interesting on that market, what kind of new opportunities are out there. i pay more attention about that. less attention about these big gigantic companies going public area >> it is interesting because these guys are friends but also fierce competitors. >> friends or find a means -- friendamies. founder of tents and and jack, they're going well. their businesses have become much more competitive over each other. we have a balkanization

emerging. >> it sounds -- you are describing what i think we saw in nearly days of the internet. it really was a small group of people who kind of knew each other, had personal relationships, not just in the.com day in san francisco, a small group of people intended to know each other and go off in their own directions. question 2000, a group of internet pioneers, jack was not really in the first batch. company whichher predated jack, but he had the power and the humor. he is almost like a court jester. the power to the government and the incumbents at that time. ofough sheer force personality, he made himself in the inner circle. >> thank you for sharing your relationship with jack with us.

thank you for having us on the show. disney is dropping almost $1 billion to buy maker studios. how does the company plan to leverage its premium content? that and more when we return. ♪

>> merchandise sales. sales were up $.7 billion. that's restoring. profit growth of 15% or more.

jon erlichman is in elway. -- l.a. class it has been a difficult couple of weeks. hulu.aol, yahoo!, a chief content officer at maker studios. she joins us now. good to see you. maker, there is a lot stuff that falls under the maker banner. >> great to see you and good to talk to. my voice is shot from last night . we had a great time on stage telling the world our brand story, or should i say the advertising world, our brand story. it highlights our upcoming content offerings. everything from epic rap battles with history,

which may be some of the most popular stuff ever done, to no teaming up people like morgan spurlock. what is behind the partnerships unveiled yesterday? click our mission is to empower creators and inspire discretion. makers are sitting at the convergence of media. the situation with new media and traditional media like tv and film. a partner like morgan spurlock, for instance, is a perfect maker creator. we are really excited. we announced a championship with morgan called smart-ish. he will be producing his own program. that is really one of the differentiators. ofhave a global network with creatorsach

in over 100 countries, and we are bring in the best from hollywood and youtube to create content together. we are really a place for collaboration. >> people interpret maker tv as a home where the maker content can live away from youtube here and what is the strategy? thee launched maker tv at start of the week. it is our own proprietary player and platform, to give audiences and brands a deeper and more immersive experience than youtube. youtube is and is going to be our biggest distribution partner. maker tv allows us to curate a best of experience of maker's content, from comedy to games to music to fashion and beauty, and then really partner deeply with brands. audiences will be able to experience a best of. think of youtube as a place for big audience and maker tv as a place to build brand.

>> everyone has been curious about disney's purchase of maker. there have been hints at the kind of ways you will be working together, maybe with short form content type to disney brands, star wars references. what can you tell us? >> we are so excited because between a natural fit content verticals. that is how we are organizing content. . really, we are looking to power short form expression of all kinds with the disney library and new disney combat -- content. we had miskicking on stage with our unity icon, and then we teased an amazing opportunity with star wars, which is already one of the most beloved brands across the network.

secondsve 10 or 15 left. disney will be curious to find its next generation of stars. int makes someone successful an online video? >> authenticity. anddas rrs -- are authentic are passionate about what they're saying and doing. authenticity and passion shows through on the platform. that is a key to great digital form content. >> keep it real. thank you for joining us. i will send it back to you. >> all right. thank you. incomeate over inequality in san francisco is only getting more heated. what is the responsibility of big tech companies to help the neighbors fear that is next. ♪

>> welcome back. i'm emily chang. take offers high-quality

entertainment around the world. this includes itineraries with suggestions from local residents. rosepoke with charlie investors.f her >> i was able to approach them and talk about the idea and they got on board immediately and were excited we can do this stuff with mobile. they came on board and have been tremendous helpers and provided essential advice for us. >> you can catch the full interview tonight on charlie rose. for the debate over income inequality here in san francisco, heated protest have erupted over rising rents. buses down to major silicon valley buses. 20 different technology countries have joined the tipping point community, a group

that funds programs to fight poverty in its corporate challenge initiative. by a ceo, ssoposed gives have raised $10 million in 60 days. the founder and ceo is with us now in the studio along with cory johnson. thank you for joining us. how did this come about? it was mark's idea? ? i got the phone, gave me the call, and proposed the idea. 20 companies income of $500,000 each. i like the idea, that is a good one. he was a catalyst and we have , salesforce,nies google, and the list goes on and on. had an amazinge response. this is just the beginning. it is day one of our challenge to our business community to get involved and give back. >> in the tech community, they

really respond to the incredible wave of criticism. i have been in new york a lot lately. people ask about culture. it is interesting and new. >> we are at a critical moment in our region's history. amazing companies are doing wonderful things around the globe. what we often forget about is people living in poverty right in the bay area. 1.3 million people are too poor to meet a sick needs. become what has increasingly aware of, we have an obligation to give back right here in our yard. >> talk about the objectives outside this particular object -- this particular challenge? >> we are nine years old. was on serving people living in poverty. like i said, 1.3 million people,

too poor to meet their basic needs, 20% of people here in the bay area are living in poverty. we find and fund the very best poverty organizations and help them scale so they can serve clients better. >> i want to take the conversation just out of the bay area. your focus is here but i wonder about the methodology you use to figure out which organizations to give money to. >> a great question. we take a business minded approach to investment. 45 organizations, we are funding. we asked them to track their results and hold themselves accountable. if they are not working, we cut grooves. just like in the business sector, a company is not performing, then you look somewhere else. we have finite dollars in the region and we have to make sure they are put into best use. we think they are doing a great

job. >> you've got a huge response from players in the technology community as the inequality protests have a loan up here you have the investor calling on even smaller companies and startups to do more. when i asked start up ceos if they are thinking about it, they -- i have not gotten overwhelmingly yes, absolutely response. think their responsibility is, even at the early stages? >> you have to build from your culture from the very beginning. just like jeff winner has done with linkedin and what levi's has done. it has always had it in the core in the beginning. i talked to the young ceo's about it being a retention tool. employees, there is a war over want to beemployees at your company. if your company's giving back to part of the community, your employees will produce more for you.

a laugh only that has been a great selling point. they want to give back. young people and the companies want to be involved in the community. whatmore optimistic about we're capable of here. a lot of negative out there. this gives us a positive story. >> do you get a sense there is an uptick in the feeling of the need of all these companies to do something that was not there months ago? >> we got calls today from companies saying they want in. we are incredibly optimistic. this will be a seminal moment in our region's history. >> i hope so. great stuff. >> thank you so much for joining us. time now for the bwest byte, one number that tells a whole lot. john is with us from l.a.. >> how about the number eight? witnessese number of

testifying tomorrow in the house judiciary committee. we will do a blowout special focus on the time warner deal tomorrow. we are looking into a lot of aspects on this. a lot of issues involved. the seminal one of technology stories of the year, certainly. >> how many people are following this in hollywood? >> they are deathly following it. all sorts of ramifications for deals and companies like disney, local tv stations, and you were talking facebook earlier in the program. some of the arguments made is that this -- this deal has to happen or comcast wanted to happen because of the scale large technologies have around the world. >> a big special coming for you tomorrow. comcast and time warner. one of the biggest potential mergers in the history. >> great stuff for the show tomorrow. it will be good stuff. class

thank you for watching this edition of "bloombert west" and we will see later. ♪

>> from bloomberg world headquarters in new york, i am mark crumpton. this is a special edition of intersection" the of business and economics with a main street perspective. in a few minutes, yahoo! ceo marissa mayer is expected to alibaba,e day after the chinese online marketplace, partly owned by yahoo!, filed for an initial public offering in the united states. the deal is expected to become the largest u.s. ipo ever. ls